Credit Suisse analysts took a look at the offshore service vessel (OSV) space and issued downgrades to three stocks. While OSVs had a terrible 2014, analysts believe the worst is yet to come for these stocks.

Not Out Of Rough Waters, Yet

Stocks in the OSV space fell about 50 percent last year, but analysts see continued pressure coming in 2015. They are forecasting pricing declines of up to 20 percent and utilization declines of up to 10 percent for the year.

Lowered Rate Projections

Although OSV rates are down 5 percent year-over-year, analysts believe there is still plenty of room to the downside. They note that current rates are still 20 to 30 percent above trough levels.

Credit Suisse’s 2015 earnings estimates are 20 to 30 percent below 2015 consensus for the OSV space.

Too Many Boats

Analysts are projecting 15 percent global platform supply vessel (PSV) fleet growth in 2015 and up to 10 percent growth in 2016. With projected delivery numbers falling off in 2015, the growing vessel count is simply driving the utilization rate lower and lower.

Project Delays Adding To The Pain

With oil prices plummeting, many deepwater projects have been put on hold for the time being. The Bonga Field development project has already been delayed from 2015 to 2017, and analysts predict further project delays will come soon.

Downgrades

Credit Suisse issued downgrades of three OSV names based on their most recent projections for 2015 and beyond. Analysts downgraded:

• Hornbeck Offshore Services, Inc. HOS from Outperform to Neutral
• Gulfmark Offshore, Inc. GLF from Outperform to Neutral
• Nordic American Offshore Ltd NAO from Outperform to Underperform
• Tidewater Inc TDW was maintained at Neutral

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